How much does an ideal life cost?

How much money do you think you would need to enjoy an “ideal” lifestyle?

Like most people, you have probably pondered this question before, possibly on weeks when there has been a rollover jackpot in the lottery, but the answer is not always clear. While you might think you know what you want now, it can be hard to be sure.

Thankfully, a recent inter-university study has answered this exact question and revealed some surprising findings. So, read on to find out how much an ideal life would cost you and how a planner can help you to achieve it.

A global study found that most people need around £8 million for an ideal life

When you consider how much you would need for an ideal lifestyle, you might think that you would require a considerable fortune but as it turns out, you can be on cloud nine with far less.

According to a global study, published in the Guardian, the answer for most people is around $10 million or £8.6 million. Of course, this amount tends to vary between cultures, some Americans said they needed at least $100 million to be happy and many even wanted $100 billion!

Surprisingly, the most popular answer from the British participants of the study was a humble $1 million or £860,000, while the majority said that even $10 million or £8.6 million, would be more than adequate for a good life.

As you might imagine, this is a much more realistic goal than £100 billion and can be achieved with hard work and careful financial management.

As Dr Paul Bain, one of the lead researchers in the study, notes in the article, while these figures may seem like a lot of money, they are actually relatively modest when spread across a whole life.

With that in mind, read on to find out how you can build up this level of wealth so you can enjoy your own ideal lifestyle.

Careful saving and investment can help you to build enough wealth for an ideal lifestyle

One of the biggest benefits of working as a skilled IT professional is that not only is your work challenging and engaging, but it is often also highly lucrative. This can mean that, with a bit of prudence, you can quickly build your wealth.

Not only might you have a large salary, but you may also have access to stock options through your employer. As we discussed in a previous article, these can potentially be very valuable, when used wisely.

As such, with careful saving and investment, it should be possible for you to build up the amount of wealth necessary to enjoy your “ideal lifestyle”. This is especially true if you start young, as you will have a longer time frame to work with.

If you want to enjoy the lifestyle of your dreams, seeking professional advice can be especially useful.

Working with a planner can help you to build your wealth much more effectively

Of course, while £1 million is a nice round figure and a good goal to aim for, in practice the amount of wealth you may need will vary. Since each person has their own wants and needs, the amount you will need for an ideal life will be unique to you.

One of the most valuable ways that working with a planner can help you reach your goal is that they can use cashflow modelling to work out how much you would need. In other words, applying business principles to personal planning.

A planner would help you establish your own personal balance sheet, profit/loss account and income statement. From this you can start to ascertain whether the goals you have are attainable, and if not, plan and implement the changes you will need to make in order to reach those goals.

For example, if your plan found that you would have a shortfall in your finances, they could encourage you to boost your contributions. Alternatively, they may recommend that you reassess your attitude to risk, so that you could receive higher returns.

Further to this, one’s plan must change as their circumstances change and this is where ‘what if’ scenarios can be plugged into the model. For example, what if my earned income increases or decreases by 20%. This can be plugged into the model and the impact shown over time to your overall circumstances.

A key function of maximising the plan  will be helping you to invest your wealth in the most efficient way, helping you to build up a robust portfolio.

For example, they might recommend that you maximise your pension contributions and make full use of your annual Individual Savings Account (ISA) allowance, which stands at £20,000 in the 2022/23 tax year. Since you do not have to pay Income Tax or Capital Gains Tax on the growth from ISAs, you can build wealth faster through them.

Furthermore, they can also offer valuable advice on how to properly diversify your portfolio, which can help to make it more resistant to financial shocks. This can help to protect your hard-earned wealth from unexpected market downturns, giving you one less thing to worry about.

Working with a financial planner can help you to manage your money in a more effective way, which can enable you to build your wealth and enjoy your ideal lifestyle.

Get in touch

If you want to be able to grow your wealth enough to enjoy an ideal lifestyle, but do not know where to start, we can help. Email enquiries@bowmorefp.com or call us on 01275 462 469.

Please note:

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Bowmore Financial Planning Ltd is not regulated to provide tax advice

The Financial Conduct Authority does not regulate cash flow Planning

Bowmore Financial Planning Ltd is authorised and regulated by the FCA.

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